The bubble will burst. How 1:2 Melbourne cafes will close down.

” is a consequence of a deeper macroeconomic shift that has already occurred. We are past peak coffee in Melbourne. No one is making any money. The incumbents are losing market share and the new comers have no idea what’s coming.

This is by no means a doom and gloom article by any mean. Square Mile’s founder and Jim Hoffmann has written in “The Bubble” a 3 part series on what’s coming…

What I believe we are heading towards is, simply, a situation where we have more cafes than we have customers for them…I think it will be a difficult time, but the upside is that it will damped the rate of new openings and we’re likely to see the market stabilise at a more sustainable size. I doubt it will be as positive an environment for growth on the other side, but it will also be less fragile.

What I see is a problem is cafe’s that are focusing on specialty coffee. Restaurants (Three Bags, St ALi, Top Paddock) will do fine because they have food, but cafes paying $41 per kilo for traceable beans, $3.50 for a bottle of organic milk, and $25 per hour for 8 staff in a peak rent location are going to struggle.

What I propose is a new platform for these cafes that will struggle. A platform where roasters, green buyers, baristas and associated businesses (bakers, etc) come together as a a buying group to provide coffee (as good of the $41 per kilo stuff) for $20 and milk that is quantitatively and objectively tastes as good as the biodynamic stuff for $2 a bottle and baristas share in the profits if there is any.